We have undertaken a case study of a Combined Heat and Power (CHP) plant applied to a mixture of buildings comprising residential premises, offices, hospitals, stores, and schools in Korea. We proposed five Plans for grouping buildings in the complex and estimated the annual 8760-hourly demands for electricity, cooling, heating, and hot water. For each Plan, we built about ten Scenarios for system construction. Then, we simulated the operation of the system to find the fuel consumption, electricity purchase, and heat recovery. Applying the local rates to the amounts of fuel and electricity, we estimated the operating costs. Combining the operating cost with the initial cost associated with the purchase and construction of the system, we calculated the payback periods for the scenarios. We found that the payback period can be as short as two years for smartly grouped buildings with a generator capacity of around 50% of the peak electricity demand. A progressive electricity rate that applies only to residential premises currently plays a key role in the economic merits. We recommend extending a sound progressive system to other types of building in Korea to promote distributed power production and enhance energy saving practices in general. (C) 2012 Elsevier Ltd. All rights reserved.